Select Committee on Environment, Food and Rural Affairs Minutes of Evidence


Examination of Witnesses (Questions 299 - 319)

WEDNESDAY 18 OCTOBER 2006

MR PETER KENDALL, MR MARTIN HAWORTH AND MS CARMEN SUÁREZ


  Q299  Chairman: Can I welcome our first set of witnesses from the National Farmers' Union to this further evidence session on the UK Government's Vision for CAP documentation. Can I formally welcome you, I think for the first time, to the Committee—is that right, Peter—in your role as President?

  Mr Kendall: I came the day after I was elected actually on renewable fuels.

  Q300  Chairman: You did. Forgive me. I will not say that you made no impact at all! I had it firmly fixed in my mind that this was going to be your first outing. This is your first outing on the CAP since you took over. Forgive me for having a momentary lapse of memory but, nonetheless, as always, you are very welcome. You are supported by Martin Howarth, the Union's Director of Policy, and Carmen Suárez, the Chief Economist. Thank you all very much for coming. I think you are going to start with a short statement to set the scene and then we will ask some questions. So, Peter, fire away.

  Mr Kendall: Thank you very much indeed for inviting us to come and share some of our views with you. To pick up, first of all, on the document as it was presented, I think we were disappointed that it failed to recognise immediately the reforms that had gone on in 2003 which, I think, from the National Audit Office Committee at the moment, we know still hang over the industry very significantly, the fact that we also now have Commissioner Fischer Boel talking about a simplification and looking at that reform of 2003, how the Health Check in 2008 and the major reform of 2003 will impact. We think it was a disappointing document in as much as it did not set out any route map on the direction of travel we were going in other than an end position. Certainly, from listening to Mariann Fischer Boel speak and the train of thought she develops, we share the view of simplifying CAP, we share the view of making steps that will help move towards that simplified CAP which we feel is a more constructive debate. What we also consider about the publication of the Treasury/Defra document was the timing. It came, just after we had had the unfortunate discussion on the CAP budget, which again I know caused significant animosity within Europe about the way that had been done as part of a bigger deal. The tactics involved with these documents always looking at very a radical reform, in contrast to what Mariann Fischer Boel says about setting out any programme of simplification and moving to a better place, we think does alienate our European colleagues quite significantly. It always goes for major reform and scrapping of CAP support for the farming industry, and when we look at the simplification again, the Health Check in 2008, I have tried to suggest that engaging with our partners within Europe, having a discussion about where we are heading and the way we want to move, is much more helpful than just by saying that our aim is to do away with all agricultural support. We, of course, as an organisation that represents both England and Wales, have some dilemmas on the fact that we now have a regional system in England and we have an historic system in Wales. I talked to farmers in Wales. I was down there only recently. Concern of farmers in Wales, when you talk about simplification and moving the whole CAP debate forward is one that, without doubt, leaves them in absolute horror and fear. They see what has gone on in England. Again I refer to the National Audit Committee Report of how much late payments have caused damage to the industry, the bureaucracy that has been involved in it and also the redistribution that has gone on through the very wide-ranging making of payments to all sorts of classifications of land. So, members in Wales are concerned about how the CAP evolves in the same way that we are, but they come from a different position, and so I think it is important that I acknowledge, when we look at how we respond to this, that Wales comes from a position of seeing a badly implemented English scheme, they see a lot of redistribution and they are nervous of how fast we move forward. And from England, certainly having been pushed as a guinea pig (and we feel we are suffering quite significantly from poor implementation), we would like to see uniformity and, when we look at Mariann Fischer Boel's proposals, we are very keen on simplifying the whole system of CAP. We would go as far as looking at the removal of intervention, looking at the removal of set-aside, trying to get towards a place where there is less distortion. We support full decoupling as a major part of that. As an organisation, we want to see industry prosper on the back of less distortion, less meddling, and so we are going to be coming into the issue of modulation. We want to see that as uniform as possible throughout the EU and not having very wide distortions between Member States. So, we very much endorse what Mariann Fischer Boel is trying to do with simplifying the CAP.

  Q301  Chairman: Can I follow up on one thing that you said. You were talking with some emphasis on working with others. When two members of the Committee went to a meeting of European parliamentarians in Helsinki last week to listen again to the Commissioner putting forward a reform agenda, one of the response speakers was from COPA, and this was like no change under any circumstances, and I think Roger Williams, who was there with me, now would back me up on that. As he went on, so his desire to see absolutely no change in the present situation mounted with volumes of rhetoric. Equally, when we went on our inquiry to Berlin, we met with the German Farmers' Union, and their official position was no change until 2013. That appears to be of the official position of the French. So, do you find anybody who is reform-minded in terms of your colleague unions that you do speak with regularly in other parts of the European Union?

  Mr Kendall: While you were in Helsinki I was in Sweden last week, and they share very much a simplification path that I have been advocating and talking about, and certainly the Danes would be similarly minded. I think the Germans, when you talk quietly to them, accept the need for a simplification of CAP and support a large amount of what Mariann Fischer Boel is talking about. You have made reference to COPA. COPA is a thorn in my side. I am new to this job, as you pointed out in the introduction, and an organisation that has little or no input to the Commission on constructively trying to have a dialogue about reform is not very valuable, and Martin, as Director of Policy, who has a lot of involvement in Brussels, will know that one of my key objectives is to make COPA much more effective in helping us have a dialogue with the Commission.

  Q302  Chairman: Let me ask you a straightforward question that I have put to everybody that we have talked to about this. What do you think the purpose now should be of the Common Agricultural Policy? It is defined in Article 33 of the Treaty but nobody is talking about changing the words in Article 33. Is there now another purpose? Here we are, in the early years of the 21st century, facing a different world, a different farming environment, than the one when the original words were conceived, the original purpose was decided. What do you think from the NFU's point of view is the purpose of the CAP?

  Mr Haworth: When we look at the original words of Article 33, I do not think that we would expect or would wish to see a big change in them. I think they have been flexible enough to admit changes over time. It is clear that the time we are living in is very different from the time when these words were written, but we would not necessarily think that there is a need to change the text of the Treaty in order to have a further evolution of the policy.

  Q303  Chairman: That does not answer my question. What you say is that you are happy with some words that were written down quite a long time ago. Do I infer from that that the purpose, as in the Treaty, is what the NFU thinks the CAP should be? I ask this in the context of now a world where decoupling has entered in, where decisions on land use are becoming more commercial and where the environmental agenda is being established under rural development plans. It is a different scenario, but I would be interested to know what you think the purpose of it is.

  Mr Kendall: If I could, as a farmer, reply to that, someone who wants to achieve my returns from the market place, and I am keen to be seen to be earning from my sales of crops, that is what helps me run the business and keeps the business viable, but I have to acknowledge that in the world of agricultural products it is not a perfect market place, there are distortions. There are other countries around the world that see agriculture as very important to their national economy and, therefore, offload or have export restitutions that distort the global market place. I think when you have that position the global market of wheat often reflects the surplus value of wheat rather than the actual cost of production. I think there is a need to have some sort of protection, some sort of cushion, for when you face the environmental constraints that I have as a European farmer. I do have constraints; I do have quite a populated island. I am competing with people from the Ukraine, from the United States, where export restitutions are commonly used. I need some sort of protection; otherwise I think we would see, as I saw Mariann Fischer Boel refer to, large land abandonment because we would have our industry at too large a risk. It is a desire to move to that market place, but I think the world has yet to move and the whole agricultural global market place is not in a position for us to do that.

  Q304  Chairman: Do I impute from that that your purpose is to maintain active use of the current cultivable land base, taking into account external cost pressures and environmental and regulatory requirements within the European Union?

  Mr Kendall: Representing farmers, I certainly am very excited by the opportunities that land can fulfil. I think we have lots of uses. I spoke to this Committee last time about renewable energy. I think it would be very short-sighted, particularly with the Government and the whole of Parliament having such a priority on climate change at this moment in time, to in any way downgrade the resource of land and farming and the agricultural industry. I do think we should find a proactive way of making sure agriculture, the industry and the ancillary trades, is ready and waiting for when we need it, and in the short-term, through renewable energy. I know that Mariann Fischer Boel again talked about bioethanol production. If that can be a way in which we can keep the industry in a good, healthy state, we are using the land in a sensible, pragmatic way to save CO2 benefits and keep the infrastructure in place, I think that is a very worthwhile use for agricultural land.

  Q305  Patrick Hall: I can understand the attraction, and probably the good sense, of not frightening the horses by sticking to a step-by-step simplification, but is there still no case for a vision of the CAP? You may not like, in fact you do not like, the Treasury/Defra one, because I have read your evidence, okay, but does the NFU have a vision for the CAP. I have been looking for this, not just from the NFU, but when we went to Germany and France, and lots of words are used but I wonder if really, when it comes to it, it is a status quo and protection that is, emotionally at least, what people are wedded to?

  Mr Kendall: I hope you would see a very different response from the NFU in England and Wales. I think we have always tried to be forward thinking. We advocated decoupling. My very first outing when I was Deputy President a couple of years ago was to go and bat amongst COPA. Our colleagues—you might not think it a concern—are not very adventurous. I was asked to go first on the issue of decoupling and I was the only one out of 25 who advocated full decoupling. I very quickly realised what a lonely place it was to be, but it need not always be. People are trying to acknowledge the need for reform and change. I think what we see out of the 2003 reform is a more distorted and a less agricultural policy than we have ever seen before. So, we are very keen to see a simplification and a bringing back, a reuniting, of the Common Agricultural Policy. We look, as I mentioned previously, at the whole basis, the fact that some sectors are still coupled, the fact that we have set-aside, the fact that we have intervention. I think we have been on record as saying that the failure of the WTO round might look good on the outside of farming, but, again, on the inside we think we need to have a multilateral agreement. So, we are trying to engage as proactively as possible in progressive reform of the CAP.

  Q306  Patrick Hall: When it comes down to basics, as your colleague has said, there is no need to change what it is all about.

  Mr Haworth: I am sorry, I thought I said there is no need to change the words of the Treaty as a prerequisite to changing the policy. As far as the `Vision' is concerned, I think we said in our document, we did not necessarily disagree with the end point of the `Vision' that Defra and the Treasury had given. As Peter Kendall has said, every farmer would like to live from the market and not from public support. That is a disposition that everybody has. The question is how we get there. It seems to us maybe more important and tactically a better way of proceeding than announcing a vision which is antagonising people by leading them to believe that we want to get there very quickly or want to get rid of all support as soon as possible.

  Q307  Patrick Hall: The Government's document talks about an end of support by 2020?

  Mr Haworth: Yes.

  Q308  Patrick Hall: As I think Peter was saying, there is a case for continuing some form of protection beyond that. That CAP has to remain reformed but keeping protection.

  Mr Haworth: Yes.

  Mr Kendall: I have made it a condition that the rest of the world needs to move with us, and what we cannot have is unilateral reforming arm CAP while other countries around the world use our market as a dumping ground. Having mentioned what I said about climate change and the ability to produce renewable energy and making sure we had a strong supply base of good, healthy, nutritious food, that would be, I think, a very detrimental policy to take. So, yes, I think we are very keen to move. As I said, as a farmer I would like to earn my money from the market place, but while other countries continue to treat agriculture as looking after their own market first and then using surpluses elsewhere, that would be a damaging goal to set that we just want to be free of support. It is a condition.

  Mr Haworth: We would not necessarily see 2020 as being unachievable. The question is, if farmers are going to live by the market without support or protection, what steps are needed to get there, which was singularly lacking from the document. We would say, firstly, there has to be a worldwide movement, we cannot remove support and protection in Europe whilst the Americans continue, in fact, to increase their support and protection. We should move there more or less together at a European level. We cannot have a single European market with very different levels of support, which we have got at the moment. Thirdly, and perhaps most importantly of all, if farmers are going to earn their living from the market, the market has to work far better than it does at the moment, because at the present time there are significant problems with the functionality of the food market.

  Q309  Chairman: I presume, Martin, that you mean both from the supply well as the buying side of it.

  Mr Haworth: Yes.

  Q310  James Duddridge: To what extent is food security regarded by the NFU as a policy objective of the Common Agricultural Policy?

  Mr Kendall: I think food security is a useful goal for us to set without getting hung up on targets. The way I would view it would be to look at the ability of the land to be ready and in a fit state to produce as much food as we require. One thing we have seen out of decoupling is that markets now drive what we grow and produce on our farms; so by saying we should be self-sufficient in a certain number of key products I think would be a wrong idea, but (apples for example) if we can find our land, our natural comparative advantages lie in certain different crops. I think we are a fantastic country for growing grass and producing milk, for example. I would hate to see that erode because of a poorly functioning supply chain. I think I would want to see the infrastructure of agriculture, I would want to see the land base kept in a really healthy, vibrant state so that we are in a position where we can feed the needs of the country, but setting goals and targets, specific numbers of what we should meet in different sectors, I think would be going back to an old-fashioned form of agricultural policy.

  Q311  Chairman: The question of food security comes in here, the word "risk" also appears. What do you think are the risks that Europe faces in maintaining a sufficiency of food supplies from within its own borders for the people who live there?

  Mr Kendall: I think there are many challenges, but I do think, if we are removing agricultural support, while having a market place, as I say, that is imperfect at this moment in time, we could see large areas of Europe not farmed. I have concerns about some of the disadvantaged areas of the United Kingdom where they do deliver, I think, very genuine public goods. My farm in Bedfordshire, probably nobody would not argue that that is of great outstanding natural beauty, though some might tell me off for that. When I look at some of the disadvantaged areas, some of the hill areas—I was up in Staffordshire recently—some of those areas, I am sure, will need continual support to thrive producing public goods. I do not want to see abandonment of land on the basis that it cannot produce some agricultural by-product as well. It is very important that we use our natural resources where we need to.

  Q312  Chairman: Can we be absolutely clear what you are saying. You are saying that you think there would come a critical mass of land abandonment that would effectively then influence the level of agricultural production for food crops, and that would, if you like, present an internal threat to the secure supply of food from within Europe's borders. Is that the correct understanding?

  Ms Suárez: That is certainly true, and I think it is quite important also to highlight that that critical mass is important, not only in terms of the actual land that is devoted to production but also in terms of the infrastructure that is necessary for the agricultural sector. We have had examples in this country, for instance what has happened during the 1990s to the Pig sector, that proved the importance of maintaining the infrastructure in place, and you can enter, as you indicated, into a kind of vicious circle in which, despite the increased efficiency of the sector, the infrastructure is not there therefore the efficiency is not reflected in an increase in the availability of food.

  Q313  Chairman: But the `Vision' document is pretty strong on saying, "You need not worry, oh, Europe about the food supply situation because the world food market will take care of any problems that we have." How do you rebut that view of the `Vision' document?

  Ms Suárez: I think that it is quite interesting that since the `Vision' document has been released there seems to be a change in the Government's vision about what is involved in the agricultural sector. We have had very recent statements by the Secretary of State himself declaring the importance of agriculture as a productive sector, as a sector that goes beyond the role of managing the landscape, but being as important as it is, it is a goal that needs to go together with the production of food and non-food products. I think those statements in themselves show that there is more to food security than initially meets the eye. I think that recent developments in terms of climate change, in terms of geopolitical events, in terms of the pandemic heath scares and also we cannot forget that when we talk about some of the main agricultural communities, we talk about, for instance, combinable crops, the level of stocks to consumption, the ratio of stocks to consumption, has been reduced very much in the last years. So, we are coming to a situation in which agricultural commodities have much tighter markets than they have had in the past and that change in the situation grants a review to the policy that we need to adopt.

  Q314  Chairman: It would be very helpful if you could send us a supplementary note on the subject of stocks that you mentioned.

  Mr Kendall: Absolutely.[7]

  Q315  Mr Williams: The capacity to produce food does not just depend upon the quality of the soil, though, does it, it depends on the presence of breeding flocks and herds, of buildings and machinery. Do you think that the present reform, the decoupled support that farming receives at the moment, is going to result in a reduction of capacity, because breeding herds, breeding flocks will be reduced?

  Mr Kendall: We are already seeing it. I was at a meeting of the NRC last week and we are seeing probably a 10% fall in the suckler cow herd since the decoupling introduction, which is, of course, worrying. It is one of the reasons why I think it is so important that we have an even-handed implementation of CAP, but to have a situation where we have coupling of the beef sector in France in suckler cows and we have full decoupling here, the fact we have very distorted systems throughout the whole of Europe means that we could see, I think, faster running down of capacity in parts of England, and maybe other parts of the devolved regions as well, than we think would be wise; hence the enthusiasm for our organisation to see a common agricultural policy again, to see that people actually do produce the market in a fair way without too much distortion.

  Q316  Daniel Kawczynski: I am very concerned about the way that the CAP is being implemented across the European Union and the huge differences that there are in its implementation. Last week when I met with the Secretary of State in my capacity as Chairman of the All Party Parliamentary Dairy Group he was somewhat surprised when I mentioned to him that the Irish Government had recently spent £300 million of their own money and of EU money on subsidising the Irish dairy industry.[8] With farmers in Wales and in my constituency so close to Ireland, how can we have a common agricultural policy if the Irish are doing something which totally goes against the spirit of it. What is your organisation, Mr Kendall, doing to make the Government report these breaches to the Commission?

  Mr Kendall: In all my meetings with the Secretary of State I have tried to argue very much in favour of, in fact, championing what I think we can do in the United Kingdom to actually meet our target, meet our goals, and having a strong, productive agricultural sector. I have made a very strong case for that, and at every opportunity I have tried to draw to his attention where I think there are challenges and compromises, I believe, because of a poorly implemented CAP reform that we have such a mixture of different system. It is adversely affecting what is going on. You are seeing quota movements in the dairy sector because of different payment regimes in different countries, you are seeing movements of stock occurring between England, Wales and Scotland because of the systems that are now being implemented. That has got to be wrong. I firmly believe that if someone is doing the job really well on one type of farm, he should not be receiving greatly different payments and having very different support, whether it is agricultural or rural development. In the case of the Irish I think it was a rounding up. Carmen has got more details on what the Irish are doing. That will distort what goes on, and I want our farmers to be able to operate in as free and fair a market as possible. We do point it out to the Government.

  Q317  Chairman: Does that mean that on the question of reducing the regulatory burden, you support Mrs Fischer Boel's line about adopting the simplified Area Payment Scheme. Are you happy with that?

  Mr Kendall: Again, as I pointed it out in my introduction when I commented on the fact that I represent Wales and England, it causes a dilemma for me on that because at the moment my Welsh members view what has happened in England, I would not say with amusement, with astonishment. They will have all their money probably in the first week of December, and you know the situation that is happening in England, and so to persuade the Welsh at the moment that they want to move to a simplified system, they want some reassurances about how the areas might be defined, how their payments might be shared with non-agricultural land. The notion of having less distortion between agricultural sectors in different countries is one of our priorities, but the Welsh at the moment are far from convinced that is even in the offering.

  Q318  Mr Drew: Perhaps we can move on to the crux of this, which is all about decoupling. I suppose the good news is that Mrs Fischer Boel was absolutely four square behind the notion that we should be looking for decoupling, but the reality is, if other countries are looking at what we have been through as a road map to how it can be done, I imagine they are somewhat hesitant about going through exactly the same process as ourselves. Talking to farmers in other countries, what encouragement would you give to them that there is a life after the dependency culture of direct payments for production?

  Mr Kendall: Martin has got a better knowledge of what is going on in other European countries where they have actually implemented regional schemes significantly more ably than we have in the UK so far.

  Mr Haworth: The Germans have implemented a scheme which is actually more complicated than ours initially, going to a simpler system in the end, and they have managed to do it more successfully than we have.

  Q319  Mr Drew: Can you say why? We keep hearing about the Germans. I know they have got the most methodical defence in world football, but they do not always win games. Why are the Germans so successful in this area?

  Mr Haworth: I think it would take me a long time to answer in full, but I would say some of the reasons are that the Germans have a Civil Service which has probably retained a greater capacity for implementing policies than we have as being one issue; and another issue would be that I think they were far more pragmatic in the way that they addressed this. They saw that they were having the same problems as we were in England on the complexity and the technology, computer back-up to implementing the policy, and therefore they took an early decision that they would make a part payment and then reconcile it afterwards, whereas I think (and this is one of the things that has come out in the National Audit Office Report this week) there was a certain amount of prevarication in this country waiting to see if it would come right and it did not. Those are the two immediate answers I would give.


7   See Ev 112 Back

8   See Ev 224 (CAP 38) note from Irish Embassy correcting these figures. Back


 
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